A Guide On How To Sell a House with Lien Against it in Texas

A house for sale with a "for sale" sign and a lien against it in Texas

Have you only owned your home for 5 to 10 years and still have a mortgage lien on it? If you’re looking to move and sell your place, the property liens may make it slightly more complex to complete the home sale. So, can you sell a house with a lien on it in Texas or do you need to cover the mortgage payments first?

That may depend on the type of lien filed against your property. In addition to the common mortgage lien, you may have another lien placed on your property, such as one filed by the court or the IRS. In these cases, you may only have the ability to sell if the home buyer is willing to pay off your lien. 

Sometimes, you may find it easier to pay the debt off before putting your home on the market. In the guide below, you will learn all about the Texas laws on different types of liens and how to sell a house with a mortgage or judgment lien on it. Now, let’s get started! 

What Is a Property in Lien?

A real estate property with a lien on it means that a creditor to whom the property owner owes money has a legal claim against the property. Essentially, creditors have full legal rights to take on the properties and sell them themselves if the debtors have not paid for the properties or refuse to pay.

A lienholder is limited in what he or she can do with an asset whether it is a vehicle or a piece of property. If involuntary liens are placed, homeowners trying to sell the property may face certain challenges.

Tax Lien Laws in Texas

Property taxes are essential for covering public services in Texas including schools, libraries, roads, parks, and other assistance. However, if a homeowner does not pay his or her taxes, the unpaid amounts end up as a lien on the property. A federal tax lien, however, follows federal laws and not the ones of Texas.

In Texas, you may face a mortgage lien or property tax liens on your property. The tax lien laws in Texas allow for the creditor to seize your home if you have outstanding debt and you’ve fallen behind on your property taxes. Essentially, the local taxing authority can force you to undergo a foreclosure on your home. Check out the foreclosure laws in TX to learn more.

However, you won’t immediately have your home foreclosed on if you fail to pay your property taxes. You will have several chances to pay off your unpaid taxes and maintain ownership of the house. 

The lender may help you set up a payment plan, and can use the property as collateral in case you have delinquent taxes and cannot pay off your debt. 

Foreclosure due to delinquent taxes usually starts in court where the legal system will file a judgment against the property. However, before a homeowner faces foreclosure, he or she gets a chance for a lien release by covering the missing tax payments, interest costs, and all other fees.

Can You Sell a Property in Lien in Texas?

In the state of Texas, can you sell a house with a lien on it? Whether you are in Texas or another state, you can sell a property with a lien. However, you need to have large enough proceeds from the sale to cover the debt you owe. If the sale isn’t large enough to cover the debt, then you need to find a buyer willing to cover the rest of the lien costs.

In such cases, you may need to find a real estate investor willing to give you a fair cash offer and take the property off your hands. If you don’t have much savings, the cash offer also needs to include enough equity to ensure you can cover closing costs and moving fees. Usually, you should have enough home equity to cover a mortgage.

How to Sell a Property in Lien in Texas

A house with a sold sign with a lien against it in Texas

The first step in selling a property in lien is much like selling homes in any other case throughout Texas. You will initially need to find an experienced real estate agent and get a good photographer after staging your home. Your realtor will help you list your home on the real estate market.

Once you have found a buyer and gotten an offer on your home, you will need to hire a real estate attorney to complete the paperwork following all regulations. You will find that selling a property with a lien, whether it is an IRS lien, an HOA lien, or a mortgage lien, does come with minor complications.

There are three main ways you can use to sell the property, which includes:

  • Using the proceeds from the house sale to repay the debt
  • Selling the house to a cash home buyer
  • Selling the property as-is with the lien attached

Use House Sale for Repayment

If the home equity of your property is large enough, you should have enough profit left over to cover the costs of your lien debt. As such, you can likely use the home sale price to repay your debt.

If you are using the house sale to repay the lien debt, then you will need to have a clear title on the property. That means all liens and fees need to get paid off before transferring the home to the new owners.

You can either pay off the debt in full or try negotiating with the lender to decrease the debt and then pay the smaller amount. You will need to get documentation from the lender showing a lien release.

Sell House to Cash Home Buyer

You can also sell your home to cash home buyers in Tyler, Houston, Austin, or elsewhere in Texas. The cash home buyer can potentially take on the property with the lien attached. Otherwise, you can ensure the cash offer is large enough to pay off the debt upon the home sale.

When you sell to a cash home buyer, you can complete the sale quickly and even forego closing costs, repairs, and even a realtor. As such, you won’t need to cover the commission fees of a real estate agent. 

Sell House As-Is with Lien Attached

You can also sell the home in its current as-is condition with the lien attached. In such a case, the buyer would have to cover the lien debt after the sale. When selling as-is, you can save on the costs of repairs and the time required to renovate your place.

Nonetheless, you may want to tidy up the place and stage the furniture to get more buyers interested in the property.

Conclusion

When you first came here, were you wondering, “Can you sell a house with a lien on it?” After reading through the guide above, you should know how to sell a home with a lien on it. 

Whether you have a property tax lien, a homeowners association lien, or even a mortgage one, you can sell the place with the help of a realtor, real estate attorney, and photographer when selling a house online in Texas. The buyer can either purchase the property with the lien attached or you can pay off the lien after the sale.

You can sell a house fast in Tyler if you look for cash buyers. Luckily, we buy houses in Texas. Contact us today!

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